October 7, 2016 7:22am

 

… The scale causes me to be concerned by the fluctuations which aren’t very encouraging for investors

It seems a sword of Damocles is always hanging over the sector

 

I answer one question; in which company should investors put, keep and commit their money!

 

Where is “our” universe going today?  If you are not a subscriber, you won’t know the morning’s indications and who is in the headlights.

 

I say what others won't, so you can do what others can't!

 

 

 

Ben Graham used to talk about the stock market being a cross between a voting machine and a weighing machine. On any given day, economic actors vote by buying and selling shares, and in the short run, the trades happen at the levels dictated by whether the buyers or sellers are more aggressive. That is the voting machine of the market. In the short run, values can be pretty senseless if one side or the other decides to be aggressive in their buying or selling.

 

Once we get through quarterly financial results <notice I didn’t say – earnings> season, it will be easier for investors to take a short -term view, but my fear is that the Q3 numbers aren't going to look much better than the Q2 numbers.

 

 

Indexes and ETFs: The IWM (+0.19%), XBI (-0.09%) are DOWN, while the IBB, and XLV are NOT indicating

BUY: AGTC and CLLS

SELL: AXGN and VSTM

Dow futures are UP +0.05% and NASDAQ futures are DOWN -0.03%

 

 

U.S. stock index futures pointed to a HIGHER open on Friday morning as traders looked digested the release that missed expectation.

European stocks opened lower as investors remained cautious ahead of the closely watched U.S. jobs report and after a dramatic plunge in sterling early in Asia trading.

Asia markets stumbled, with sentiment weighed by the British pound's sharp drop in early trade, while traders likely took to the sidelines ahead of the key U.S. September jobs report due later the global day.

 

Data docket: The jobs report is a key indicator on labor market conditions, which is part of the Federal Reserve's so-called "dual-mandate" in determining monetary policy. Wholesale trade is due at 10:00 a.m. ET, with consumer credit set to come out at 3:00 p.m. ET.

 

 

The stem, cell, gene and regenerative therapy (SCG&RT) sector closed NEGATIVE on Thursday, POSITIVE on Wednesday, NEGATIVE on Tuesday and Monday and POSITIVE last Friday.

The SCG&RT sector’s record after the last 5 days (of 43 covered companies):

  • Thursday closed NEGATIVE with 32 decliners, 9 advancers and 2 flats;
  • Wednesday closed POSITIVE with 4 decliners, 35 advancers and 4 flats;
  • Tuesday closed NEGATIVE with 30 decliners, 12 advancers and 1 flat;
  • Monday closed NEGATIVE with 26 decliners, 14 advancers and 3 flats;
  • Friday closed POSITIVE with 12 decliners, 29 advancers and 2 flats;

 

 

Remembering Thurssday’s closing post, “The domino principle … Makes the claim that if one thing ensues another will invariably follow … thus the indexes indicated a downslide after a big sector move, the weak pattern orchestrated one move after another with the iShares Nasdaq Biotechnology ETF (IBB) falling 2.28%”

  • I keep pointing out that, everything is restorative. “You have to look at the overall market environment to be ready to contrast “our” universe and compare the sector.

Investors are or have been holding  back from big bets ahead of jobs data that could help decide whether the Federal Reserve hikes interest rates later this year.

  • Reiterating, what's going to be important is financial results/earnings upcoming season as  comparisons from last quarter or even Q1 and Q2, when operating expense <spending> has been increasing while fear was proliferating that the capital markets will be constrained in pricing needed offerings as  … TOO deleterious i.e. TOXIC!

I have been writing about slowing share pricing growth for the past year. Many CEOs consider me a gloom and doom “pundit”, there was a lack of belief in my thesis.

  • Yet, over the past few year, months, week and day, many members of the corporate “elite” have agreed with me about the peripatetic  or nomadic nature of fluctuating growth – the emails and calls make the point.

 

It’s the usual lately,  that's good, bad or ugly but, reality is material.

 

 

You’ve made it to the office, turned on the monitor, having just gotten your coffee and it hits you - what could be today’s trades? 

Watch list:

  • The iShares Nasdaq Biotechnology (IBB) closed Thursday down -2.28% and is indicating UP +0.08% in Friday’s pre-market;
  • The SPDR S&P Biotech ETF (XBI) closed Thursday down -3.09% and is NOT indicating in Friday pre-market;
  • The Health Care Select Sector SPDR ETF (XLV) closed down -0.37% Thursday and is NOT indicating in Friday’s pre-market;
  • The iShares Russell 2000 (IWM) closed down -0.10% on Thursday and is indicating DOWN -0.23% in Friday’s pre-market.

 

 

Companies in my headlights:

Applied Genetic Technologies (AGTC) closed DOWN -$0.11 to $10.07; following Wednesday’s $10.18, Tuesday’s $9.98, Monday’s $10.04, and last Friday’s $9.78. Cash of $172.7 M, revenue, no debt, and a named partner – Biogen (BIIB). Multiple trials as well as pre-clinical programs and research in a hot universe, a book value per share of $9.87 and NO need for the capital markets access . A float of 9.88 M shares with 18.05 M outstanding, with 52.30% held by institutions and a short % of float of 2.16%. For Q2/16, AGTC recorded net income of $2.7 M, compared to a net loss of $7.96 M in Q2/15. At June’16, the cash, cash equivalents and investments amounted to $172.7 M.  AGTC believes that these cash, cash equivalents and investments will be sufficient to enable it to advance planned preclinical studies and clinical trials for its lead product candidates for at least the next two years – Maintaining BUY;

AxoGen (AXGN) closed DOWN -$0.21 to $8.24. AXGN proposed an offering, in this market the discount could be onerous with the question of what percentage of warrants will be added by the bankers. AXGN has had strong revenue per share = $1.18 and current cash of $18.27 M minus what was spent in Q3 but, cash per share of $0.61 and debt of $24.95 M – SELL;

Cellectis SA (CLLS) closed DOWN -$0.45 to $22.65 after Wednesday’s $23.10, Tuesday’s $23.00, Monday’s $23.24 and last Friday’s $24.08. 9/1 was priced  at $26.52 folloed by 8/1’s $27.10 and 7/1’s $27.25. News has been vey weak as the last update other than a patent and winning EuropaBio’s 2016 Most Innovative European Biotech SME Award for the healthcare category was a P1 study of UCART19 in pediatric acute B lymphoblastic leukemia (B-ALL) was initiated at the University College of London (UCL), with the first dose administered to a patient in 6/16. This UCART19 clinical trial was sponsored by Servier in close collaboration with Pfizer (PFE). Still oversold  and a candidate for an upside – BUY;

Verastem (VSTM) closed UP +$0.10 to $1.49 after Wednesday’s $1.39 ($0.06), Tuesday’s $1.33, Monday’s $1.32 versus last week’s – Friday’s $1.33. I used to depend on the cash per share number but, even that is down to $2.51 and quarterly financial results will show increases in spending and NO platform news. I am NOT deterred by a “flash” price target by Wainright, what’re all about pitching a financing with unrealistic prognostications. Never a trusting person, take the $0.17 since 10/3 and be happy for another day – Maintaining SELL;                                                         

 

 

Whether information or intelligence is good, bad or somewhere in between; I put into context what is relevant and useful for investors.

Henry McCusker, the editor and publisher of RegMed Investors does not hold or have positions in securities referred to in this publication.

Henry’s comments are for informational purposes only and are not a substitute for personalized advice. Consult your advisor about what is best for you.